A surprisingly strong start by U.S. GDP to 2021

Sources: Bloomberg, Wells Fargo Securities, and Wells Fargo Investment Institute. Quarterly data from April 1, 2015 to June 30, 2021. Q3 2021–Q2 2022 are Wells Fargo Securities forecasts, as of September 9, 2021. Forecasts are not guaranteed and are subject to change. GDP = gross domestic product. QoQ = quarter over quarter. SAAR = seasonally adjusted annual rate.

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Key Takeaways

  • Successive rounds of economic stimulus during the opening months of 2021 propelled strong economic and earnings growth through midyear, a key engine behind the latest leg of the stock market’s rally.
  • Strong economic growth risks overheating, which adds to uncertainty over the outlook for inflation, Federal Reserve policy, interest rates, and, ultimately, stock and bond prices.